[ForHackernews]

I disagree with this: there's a genuine difference between non-productive assets like bitcoin (and gold) and productive ones like companies.

> Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

> Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

> ...

> A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

--Warren Buffett https://www.berkshirehathaway.com/letters/2011ltr.pdf

(emphasis added in the final paragraph)

[briefcomment]

That's not really a useful comparison. Of course a cube of the world's gold wouldn't really do anything. But a cube of soil and gas stations would be pretty useless too, without some work by humans. If humans worked the gold, it would return to being used for a purpose. That purpose is "trustless" accounting, which is certainly valued by some. Instead of relying on ledgers, and paper, and accountants and bankers, gold provides you some control of the money you have saved.

[anonisko]

Farmland is a speculation that we won't completely degrade the topsoil that makes it useful for agriculture.

Exxon Mobile is a speculation that they'll be able to pivot their business out of carbon fuel long term. Even monster companies falter and fail. Exxon in particular is down 50% from its peak in 2014.

Income generating assets are fantastic, but owning them requires work to constantly re-assess the landscape that makes them capable of generating income. Some people like Buffett are really good at that game. Winners like him start to win even more when they have hundreds of billions of wealth to slosh around which gives them the power to create self fulfilling prophecies with their investments that you and I don't have individually.

This is why people have started using passive index funds as savings accounts, which seems to be starting to distort the market and has a lot of people worried that it will lead to a housing bubble like crash, especially with Boomers withdrawing their retirement savings from the market while Millennials and Gen X might not earn enough to outpace the withdrawals. A demographic bomb.

Do we really want a world where doctors feel compelled to waste valuable time and attention playing the stock market game because a savings account doesn't even pretend to protect your money from inflation anymore? People from all walks of life with money to protect are increasingly riddled with anxiety that the wealth they've worked hard to save is getting washed out from under them, and it's making us all a neurotic mess of a society.

[imtringued]

> Farmland is a speculation that we won't completely degrade the topsoil that makes it useful for agriculture.

That merely reduces the potential return, it doesn't eliminate the potential for return entirely, which is something Bitcoin suffers from.

>Exxon Mobile is a speculation that they'll be able to pivot their business out of carbon fuel long term. Even monster companies falter and fail. Exxon in particular is down 50% from its peak in 2014.

Or I can just buy their stock with the expectation that they pay dividends or engage in stock buyback programs that return value to investors. Bitcoin has no potential for returns.

>Income generating assets are fantastic, but owning them requires work to constantly re-assess the landscape that makes them capable of generating income.

The inability to generate a return reduces the potential for gains significantly.

>This is why people have started using passive index funds as savings accounts, which seems to be starting to distort the market

There are thousands of index funds using completely different strategies. I don't know how you expect that to distort the market. The reason why small retail investors should just stick with a standard index is that they simply do not have high enough capital and thus returns to justify spending money or time on complex analysis or engage in manual rebalancing of their portfolio which involves taxes and order fees. Index replicating ETF are just a cost saving strategy for small investors. If you believe that small investors are distorting the market then institutional funds would rejoice and take advantage of the greater volatility and deploy more capital because of the almost risk free return that such a "distortion" would bring with itself. Since the return of a managed fund exceeds the return of an algorithmic fund people would switch their strategy until both strategies have an equal return on investment.

>and has a lot of people worried that it will lead to a housing bubble like crash

If a lot of people are worried about a crash then why are they investing in a way that perpetuates a crash? They would have to blame themselves for their risky strategies. Stop getting interest only mortgages. Stop buying GME. Stop buying Bitcoin and so on.

>especially with Boomers withdrawing their retirement savings from the market while Millennials and Gen X might not earn enough to outpace the withdrawals. A demographic bomb.

You mean well deserved inflation and full employment? Who is going to shed a tear because of that? Are Millenials going to complain to Boomers that they gave them too many jobs and too much pay?

>Do we really want a world where doctors feel compelled to waste valuable time and attention playing the stock market game because a savings account doesn't even pretend to protect your money from inflation anymore? People from all walks of life with money to protect are increasingly riddled with anxiety that the wealth they've worked hard to save is getting washed out from under them, and it's making us all a neurotic mess of a society.

You can send your complaints to your central bank. They are following a pretty stupid strategy that is counterproductive to their own declared goals. It's pretty simple, if the supply side is saturated simply stimulate the demand side (fiscal policy). Supply and demand have to be kept in balance. It's pretty ironic how Bitcoin anti inflation warriors complain how inflation erodes savings yet they are eroding even faster in a low inflation economy.